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- June 29, 2006 -

 
     

Weyerhauser Finds Basic Blocking and Tackling Helps Link Supply and Demand

 

 
     
 

How much will customers buy? Try asking them

 
 

 

SCDigest editorial staff

The News: Lumber, building products and paper manufacturing giant Weyerhauser improved supply chain by some basic blocking and tackling – like asking customers how much product they are going to need.

The Impact: Shows how really early we are in supply chain maturity in many companies and industries, and the opportunities available to many from a focus on supply chain.

The News: As reported this week in the Wall Street Journal, Weyerhauser is making some important business and supply chain strides through some basic blocking and tackling – like taking customer forecasts into account in its supply-side strategy.

As we reported in Supply Chain Digest, Weyerhauser earlier this year announced a series of supply chain related strategies and improvements that included plans to present a
“single face” to customers across formerly different business units, and a leaner, more responsive manufacturing strategy. (See Weyerhaeuser Restructures to Lower Inventories, Build a More Responsive Supply Chain.)

An outgrowth of these plans, the company is hoping to get a better handle on supply and demand and smooth out the vicious cycles that have plagued the building products industry. As the Wall Street Journal reports, “Weyerhauser has begun attempting to sell wood products much as retailers such as Wal-Mart Stores sells consumer goods: Stock inventory based on precise customers forecasts, not estimates that have often proven wrong.”

Now, three supply chain managers roll up data from the company’s 43 North American sales regions based on what customers say they plan to order in the next 6 to 24 months. In the past, Weyerhauser relied almost exclusively on internal forecasts which – surprise! – often proved highly inaccurate.

The company then drives the data back up its supply chain. Factory managers meet weekly to compare inventories and production plans with the forecasts and adjust as needed.

Using this approach, for example, Weyerhauser has been able to keep inventories of soft wood lumber at about one week’s demand, whereas in the past, wit the housing slowdown, they likely would have grown to 2-3 weeks of inventory.

In another case, supply chain managers were able to get early indications in January that builders in Ohio needed more supply because a warm winter was allowing building to begin.

Key to the effort is making the entire supply chain work together, something that didn’t happen too much in the past. The WSJ story, for example, quotes one Weyerhauser distribution manager as saying that when sales or customer service called about getting out an order, the answer often would be “when we can.” Now, that manager says, “Our job is to say Yes.”

Are there still lots of companies with opportunities to greatly improve through basic blocking and tackling in supply chain management? Why is that? What are the barriers to getting going? Let us know your thoughts.

 
     
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